H-ONE Co., Ltd. Business Report FY ended Mar. 2017

Financial Overview

-Revenue decreased due to the effect of negative currency translation, although production volume of automotive frames shipped to major customers increased 13% year-over-year.

Operating income

7,760

6,067

27.9

-Business results improved year-over-year. Profit from sales of dies in North America decreased. In Japan, profit increased because of higher volumes of unit production and the positive effects of cost-cutting initiatives. In China, unit-production increased. As for business performance in other Asian countries and Oceania, unit production increased in Thailand and the amount of loss incurred at the Indonesian subsidiary improved.

Income before income taxes

7,549

4,377

72.5

Profit for the year attributable to owners of the parent

6,057

2,383

154.2

Sales by segment

Japan

Revenue

37,844

33,512

12.9

-Revenue increased, thanks to higher production volumes of automotive frames.

Income before income taxes

3,707

1,219

204.1

-Income increased due to effective production-cost reductions, higher production volumes, and an increase in dividends received from foreign subsidiaries.

Europe and North America

Revenue

81,992

99,904

(17.9)

-Revenue decreased due to the negative effect of currency translation, in spite of the fact that production volumes of automotive frames were high.

Income before income taxes

2,187

2,560

(14.6)

-Income decreased due to the effect of negative currency translation combined with lower profits from sales of dies, even though investment income increased from subsidiaries accounted for under the equity method of accounting.

China

Revenue

37,340

39,020

(4.3)

-Revenue decreased due to the effect of negative currency translation, in spite of the fact that production volumes of automotive frames increased year-over-year.

Income before income taxes

4,014

2,226

80.3

-Income increased due to higher unit production volumes and greater content on more types of vehicle models.

Asia and Pacific

Revenue

25,560

27,786

(8.0)

-Revenue decreased due to the effect of negative currency translation, in spite of the fact that overall sales at other segments increased year-over-year, making up for lower production volumes of automotive frames in India.

Income before income taxes

(218)

(597)

-

-The operating loss occurred by the Indian subsidiary grew even bigger due to lower production volumes, while the operating losses at the Thai and Indonesian subsidiaries improved.

Business Developpment

Production

China: WH Auto Parts Industries Inc. completed the installation of a 3,000t servo transfer press, which started operating in October.

India: The installation of a stamping line was completed at Plant No. 2 of H-one India PVT., Ltd. located in Rajasthan. After the completion, the plant is now able to manufacture products seamlessly, from stamping operations to welding processes.

Japan: Kameyama Works located in Kameyama, Mie Prefecture plans to complete the rebuilding of its high-efficiency welding line within the next fiscal year.

R&D Activities

Japan: The Company, Nippon Steel and Sumitomo Metal Corp., and Nippon Steel & Sumikin Pipe Co., Ltd. are jointly advancing R&D activities on Three-Dimensional Hot-Bending and Direct Quench (3DQ) technology. They have developed and started commercial production of a front pillar in which this latest 3DQ technology is used. The Company was in charge of developing manufacturing technology that can be applied to manufacturing automotive frames.

Management policy: To enhance the H-one brand, quality, and reliability; develop the highest technology; and enhance the profit structure.

Define areas of focus

Strengthen sustainability

Maintain high quality

Improve profitability

Develop the highest level of technology and expand the scope of business operations

Strengthen human-resources development

-Strengthening ESG (Environment, Social, Governance) initiatives and developing human resources are fundamental to ensuring sustainability of the Group. The Company is working on developing new products and technology that can respond to various requirements that will arise in the future. The Company is further strengthening its operational framework to meet customer needs globally in terms of quality, cost, and delivery (QCD). The Company aims to expand its business by winning new customers.

Capital Expenditure

(in millions of JPY)

FY ended Mar. 31, 2017

FY ended Mar. 31, 2016

FY ended Mar. 31, 2015

Overall

15,657

16,680

33,995

-Automotive Parts Division: JPY 5,488 million to launch production of new automotive parts, and JPY 10,168 million to increase/upgrade general-purpose production facilities to raise productivity and to extend and reconstruct buildings.